The number of adults (aged 40 years and older) living with dementia worldwide is expected to nearly treble, from an estimated 57 million in 2019 to 153 million in 2050, due primarily to population growth and population ageing (according to The Global Burden of Disease study ).
Ideally, you should have your affairs in order long before incapacity ever becomes an issue in your life (and hopefully it never will). However, if you receive a diagnosis of dementia or other medical condition that will likely result in the decline of your capacity, it is important to promptly review your estate planning to ensure your wishes will be implemented if/when you are unable to manage your own affairs.
What do I need to consider?
Generally, from an estate planning perspective, the following are common considerations:
1. Your will
If you lose testamentary capacity, you will be unable to update your will. While someone may be able to apply to the Supreme Court for a statutory will to be made on your behalf after you’ve lost capacity, this is a costly process and may result in a will that does not reflect your wishes.
Make sure your will reflects your current wishes and have it updated if it does not.
2. Your Enduring Power of Attorney (“EPA”)
Similar to a will, if you lose the capacity required to make an EPA you will be unable to make an EPA or update your current EPA.
An EPA is a legal agreement giving someone else the power to make personal (including health) and/or financial decisions on your behalf. “Enduring” means that the power continues even if you lose the capacity to make the decisions yourself.
Having an EPA ensures that the person(s) you want to make decisions on your behalf can do so.
If you do not have an EPA, someone will need to make an application to the Queensland Civil and Administrative Tribunal to be appointed as your administrator. This is a costly process and takes time for a decision to be made (approximately 20 weeks as of 1 July 2024).
3. Your role(s) in companies, trusts and self-managed superannuation funds (“SMSFs”)
(a) Companies
If you are a director of a company, who will become the director(s) of the company if you were to lose capacity? Are these the people you trust in this role?
(b) Trusts
If you are a trustee or an appointor/guardian/principle of a trust, who will step into those roles if you lose capacity? Are these the people you trust in these roles? Is there a risk that if one person gained control, they could distribute all of the trust assets to themselves, cutting out other family members you want to benefit from the trust?
(c) SMSFs
SMSFs are governed by very strict rules and if these are breached there is the potential for severe penalties. If you are a trustee of the SMSF or a director of the corporate trustee of an SMSF, if you were to lose capacity, who would step into your shoes? Will the SMSF remain compliant?
What do I need to do?
It is best to have your estate planning in place long before incapacity becomes an issue as incapacity may occur by surprise, for example, due to an accident.
If you don’t have a will or EPA or aren’t sure your current documents reflect your wishes, please call our office and we can review your documents with you and/or help you to make new documents.
If you are uncertain about what will happen with your companies, trusts and/or SMSFs in the event of your incapacity, we will be able to review the relevant documents and advise you on how to ensure your wishes are implemented.
By Hannah Willis
There are a number of podcasts that cover capacity and power of attorney
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